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There has been a great deal of reporting in the papers concerning talks between Japan Airlines (JAL) and U.S. rivals Delta and American over a possible capital infusion to prop up the struggling Japanese carrier. See, e.g., Yoshio Takahashi, JAL Plans Job Cuts, Confirm Alliance Talks, Wall St. J., Sept. 15, 2009 (available here); Hiroko Tabuchi, Japan Airlines in Talks with U.S. Rivals, N.Y. Times, Sept. 14, 2009 (available here). The talks come amidst speculation that the United States and Japan are making progress on securing a new biltaeral air services treaty to replace their highly restrictive one. See 3 Av. L. Rep. (CCH) ¶¶ 26,366a et seq. (containing the U.S./Japan bilaterals and subsequent amendments). There is no word yet on whether the new agreement would fall within the conceptual framework of the U.S. open skies policy. See generally In the Matter of Defining Open Skies, 3 Av. L. Rep. (CCH) ¶ 26,960, at 23,901 (Aug. 5, 1991); see also U.S. International Air Transport Policy Statement, 60 Fed. Reg. 21,841 (May 3, 1995).

The establishment of a U.S./Japan open skies biltaeral may be critical to the success of talks between JAL and the U.S. carriers. As it stands, American's access into the Asian market depends on its codeshare arrangement with JAL as part of the oneworld alliance. American is therefore understandably concerned that Delta--one of its chief rivals and a member of SkyTeam--is apparently seeking to lure JAL away. However, JAL's participation in either oneworld or SkyTeam lacks the boon of antitrust immunity for the deal. As has been Department of Transportation policy since the early 1990s, antitrust immunity is only awarded to arrangements with carriers from States which have an open skies bilateral with the U.S. While it's possible that American is promising substantial funds for JAL simply to keep its codeshare deal alive, in all likelihood it is looking for a much deeper integration in the form of a fully immunized alliance. This would allow American and JAL to coordinate on routes, branding, and establish a mechanism for revenue sharing. At the same time, Delta could strengthen SkyTeam by adding JAL into the mix. Like American, it would still need antitrust immunity to take full advantage of JAL's participation.

Arguably, there is more at stake for American over the future of JAL than for Delta. Delta already has access to the Japanese market through Northwest Airlines. Bringing JAL into SkyTeam or even simply luring it out of the oneworld would devastate the alliance's (and hence American's) Asian market access. The other major Japanese carrier, All Nippon Airways, is already a member of the Star Alliance and would therefore not be a viable partner for American to court. JAL is reportedly seeking $2.5 billion in funds--a number American is unlikely to match given the present state of its balance sheets and the present downturn in demand for air transport services. It is possible that American could convince other oneworld partners, such as British Airways, to take a stake in JAL. However, they too are suffering under the present crisis and may not be keen on spreading their remaining capital too thinly.

Assuming that American and, potentially, some of its oneworld partners do take a stake in JAL on the grounds that the Japanese airline will further integrate itself into the alliance, it may be too little, too late. The 2009 FAA Reauthorization Act--which has already passed the House--contains a provision which would sunset all antitrust immunity for international alliances and potentially set the DOT's immunity powers on the road to extinction. This possibility may very well dissuade Japan from signing an open skies agreement with the U.S. Arguably, without the bait of antitrust immunity, the U.S. could not have secured its open skies relationships with the European Community, Canada, and Australia. If that happens, an ownership stake in JAL may fast resemble a familiar phenomenon in the airline industry: a bad investment.